Demand
What is demand?
Quantity of a good that consumers are willing and able to pay.
What is equilibrium?
Where supply and demand cross one another.
What is supply?
The amount of a good or service that an organization/person/firm is able to provide to the market
What does it mean to say a good is elastic?
a change in price will cause a change in quantity demanded
What are the 3 business organizations?
Sole Proprietorship, Partnership, and Corporation
What is the law of demand?
As price increases, quantity demanded decreases
What is a surplus and where is it located on a supply and demand graph?
When quantity supplied is greater than quantity demanded, excess units. Above equilibrium
What direction does the supply curve move? Why?
Up, Law of supply
Give an example of an elastic good and an inelastic good.
elastic: cereal, fast food, clothes
inelastic: medicine, drinking water, gas
Give and example of a sole proprietorship.
Taco stand, Cake Baker
What are the 5 determinants of demand?
Change in income, Change in population, Change in taste/preference, Substitute, and Complementary Goods
What is a shortage and where is it located on a supply and demand graph?
When quantity demanded is greater than quantity supplied, below equilibrium.
What are the 4 determinants of supply?
Price of inputs, technology, taxes, number of firms
What are the 4 factors that affect elasticity of demand?
% of budget/income, number of available substitutes, luxury vs necessity, time
What is limited liability?
a persons financial liability is limited to a certain amount, typically the value of the persons investment
What happens to the quantity demanded of shoe laces if the price of shoes increases?
Decreases, because price increase of a complement
How does equilibrium cause satisfaction for both sides of the market?
The buyers are able to purchase enough units at a cheap enough price. The sellers are able to make profit by selling at a high enough price.
Coca Cola found a new way to produce the same bottle at half the price, what is the determinant and how does that affect the market?
Technology, Increase in Technology
Which good is more elastic, 2021 Toyota or a used car? Why?
Used car, there are more available substitutes for a used car rather than a brand new car.
What do sole proprietorship and partnership have in common?
Less people, unlimited liability, income based taxes